Solution-Prepare a worksheet that shows the correct net

Prepare a worksheet that shows the correct net income

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Reference no: EM133173725

Question - Misstep Company has great expertise in some areas, but counting is not one of them. Since Year 1, they have been miscounting ending inventory and applying FIFO incorrectly. Their new accountant has just discovered the errors. The recorded net income and uncorrected errors since Year 1, their first year in business, are:

Year	Net Income	Ending Inventory error Over/understated	Amount
1	$80,000	Overstated	$7,000
2	84,000	Overstated	6,000
3	88,000	Understated	5,000
4	90,000	Understated	3,000

Required - Prepare a worksheet that shows the correct net income for each year. Indicate each numerical change and indicate if the amount is added or deducted. Part marks are based on each correct addition or subtraction. (Hint: Remember that an ending inventory error in one year represents a beginning inventory error the next year.)

Prepare a schedule that shows the correct ending retained earnings for each year.

Reference no: EM133173725

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Prepare a worksheet that shows the correct net income

Reference no: EM133173725

Reference no: EM133173725

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